Report: Finance Ministry insists on 10% devaluation of ruble

MOSCOW, Jan 31 (PRIME) -- The Russian Finance Ministry has revealed calculations based on a new state budget spending rule which can be introduced in 2017, and the figures imply that the exchange rate of the ruble must decrease 10% to fulfill the plan, as reported by Reuters and calculated by experts polled by news daily Kommersant.

Earlier in January, President Vladimir Putin supported a government idea to spend any windfall energy revenue to replenish the Reserve Fund and the National Wealth Fund in 2017. The revenue will be considered windfall if the oil price exceeds U.S. $40 per barrel, the official forecast.

According to calculations of the Finance Ministry, the ruble will amount to 69.42 per U.S. dollar at an oil price of $40 per barrel, while budget deficit will amount to 3.1% of the gross domestic product (GDP) and reserve spending to 1.8 trillion rubles in 2017. The current oil price of $55 implies a budget deficit of 1.5% of the GDP and reserve spending of 464 billion rubles if the budget spending rule is not used.

The use of the budget rule would lead to a 0.7% budget deficit, reserve fund replenishment by 241 billion rubles and a ruble rate of 64.9 against the U.S. dollar.

The authorities are able to trigger the devaluation without formally restricting the floating rate. In this case, the budget can stabilize at an oil price of $61, the experts said.

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